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TMI Blog1997 (9) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... uding wire rods) of iron and steel, rolled, forged, extruded, formed, finished, whether in straight lengths or in coils ...... , and under Heading 72.28 as `Other bars and rods of other alloy steel ...... or alternatively under Heading 72.24 as `Semi-finished products of other alloy steel after 1-3-1988 ; the Departmental authorities at Bombay have classified the goods under Heading 8202.10 as interchangeable tools for hand tools while the authorities at Gujarat have classified them under Heading 7308.90 as other articles of iron and steel up to 1-3-1988 and under Heading 7326.90 after 1-3-1988. 3. We have heard Shri A.M. Setalvad, learned Sr. Counsel appearing along with Shri D.B. Shroff, learned Advocate and Shri M. Jayaraman, learned DR and carefully considered their submissions. 4. We find that Chapter Note 1 of Chapter 84 provides that apart from blow lamps, portable forges, grinding wheels with frameworks, manicure, pedicure sets and goods of Heading 8204. This Chapter covers only goods with a flat working edge, working surface or other working parts of : (a) Base Metal (b) - (c) - (d) - The tool bit blanks manufactured and cleared by the appellants admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Heading 7224.00 which covers semi-finished products of other alloy steel. We have already held that the goods in question are in the nature of semi-finished products. This Heading is more appropriate than the Heading 7326.90 where the Department has sought to classify the goods after 1-3-1988. 7. In the result, we hold that the tool bit blanks would fall for classification under Heading 7308.90 up to 1-3-1988 and under Heading 7224.00 subsequent to 1-3-1988. Accordingly, the impugned Order-in-Appeal No. E/3554/87-B is set aside and this appeal allowed, while the impugned Order-in-Appeal No. E/4553/94-B is modified to the extent indicated above - that is, the impugned order of classification under 7308.90 for the period up to 1-3-1988 is confirmed and classification under Heading 7326.90 for the subsequent period is set aside. The appeals are disposed of in the above terms. Sd/- (Jyoti Balasundaram) Judicial Member Dated : 17-5-1996 [Contra per : S.K. Bhatnagar, Vice President]. - With due respects to Hon ble Member (Judicial), my views and orders in the matter are as follows. 8. I observe that as per the Machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orked as well but it is noteworthy that it is a residuary entry and will be attracted only if the article was of a type classifiable under this chapter but not covered by any of the preceding headings. The nature and type of the articles covered under this chapter are very different from that of tools and blanks and once again because of Chapter Note (1) only blanks for angles, shapes and sections only would be classifiable under Heading 73.26. 15. Further there is no doubt or dispute that these are admittedly blanks for certain type of tools and blanks as we have seen are articles which have travelled beyond the stage of ordinary iron and steel materials or identifiable with articles falling under any of the headings of Chapter 72 or 73 but had not yet acquired all the characteristics of a tool bit. However, on the analogy of the definition of the semi-finished products they could be considered as unfinished/semi-finished tool bits classifiable in terms of Rule of Interpretation No. 2(a) which refers to incomplete or unfinished goods having the essential character of complete or finished goods and inter alia covers blanks [as per 2(a) Clause (ii) CCCN]. 16. It is also notewo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. Sd/- Sd/- (Jyoti Balasundaram) (S.K. Bhatnagar) Member (J) Vice President Dated : 11-6-1997 Dated : 10-6-1997 17. [Order per : S.L. Peeran, Member (J)]. - The question had been framed at page 9 of the order. It has been pointed out by the Learned Sr. Advocate that there has been a typographical error in the first question inasmuch as the tool bit blanks classifiable under heading 7308.90 of the period up to 1-3-1988 has been correctly typed in question number 1, while for heading 7224.00, error in typing has occurred, inasmuch as it has been shown as heading 8326.90. It is an obvious error as can be seen from the order of the Member (J), which has clearly held that these tools bits blanks are for the period after 1-3-1988; and shall be classifiable only under Heading 7224.00 as per page 4 of her order. Therefore, the learned Sr. Advocate, at the outset, submits that the controversy in the present case between the two members in the form of difference of opinion is pertaining to Chapter Heading 7308.90 prior to 1-3-1988 and 7224.00 after 1-3-1988 in terms of the order proposed by learned Member (J) or under Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out to me. He also brought to my notice several judgments on the point of classification earlier to the introduction of the new tariff in their own case, wherein the Tribunal has categorically held that the item in question tool bit blanks cannot be considered as tools under Tariff Item 51A of the erstwhile tariff but to be classified under Tariff Item 68. It is his contention that the characteristics of the goods have not changed on the introduction of the tariff heading and in this regard he pressed into service the judgment of the Hon ble Supreme Court of India rendered in the case of Indian Metals Ferro Alloys Ltd. v. Collector of Central Excise, as reported in 1991 (51) E.L.T. 165, wherein, the Apex Court has held that the change in tariff does not change the nature of goods. The learned Sr. Advocate further pointed out to HSN Explanatory Notes at page 1008 in respect of Chapter 72.28 dealing with other bars and rods of other alloy steels etc. particularly to the reading of the notes under (B) hollow drill bars and rods wherein it has been clearly stipulated that the steel may be cut into short pieces for manufacture of drill bits which fall under 82.07. It is his conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem. The lower authorities especially the Assistant Collector has noted in detail the contentions raised by the party. In their letter dated 20th May, 1996, at page 67 of the paper book in Appeal No. E/3554/87-B arising against the order of the Collector of Central Excise, Bombay, the appellants contended in reference to the queries posed by the Assistant Collector dated 13-5-1986 pertaining to the manufacturing process that 69% to 83% contents are of iron in different types of materials produced by them and remaining elements comprise of carbon, silicon, manganese, phosphorus, sulphur, chromium, W-tungsten, molybdenum, vana-dium, cobalt. They also mentioned that the predominant elements is further iron. They gave the details pertaining to the heat treatment process inasmuch as that the heat treatment varies from 5500C to 12400C. It is cooled in the open air; part of it is below re-crystallisation and part of it is above re-crystallisation; polishing and cleaning is done manually; range of sizes is from 3.32" cross section to 1" cross section i.e. from 2.38 mm to 25.4 mm; cutting of the tool is done on the bandsaw cutting machine. 21. As regards the query posed by the Assistant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the lower authorities including the detail submissions as well as the technical literature. However, the lower authorities have not looked into these aspects of the matter, but has straightaway proceeded to hold that they are tools and earlier classification under Tariff Item 68 are not applicable to the present classification under new tariff. The Assistant Collector has proceeded to hold that he is satisfied that the test of essential characteristics is satisfied inasmuch as it has a cutting edge, shape and capability to cut. However, the learned Assistant Collector has not produced any evidence with regard to this finding that the item has acquired an essential characteristics of a tool edge, but he has drawn his own inference against the solid evidence in the form of affidavits that the item is a mere blank and has not acquired the characteristics of the tool. The learned Assistant Collector has proceeded to apply Rule 2(a) of Rules of Interpretation without looking into the Rule 1 of the Rules of Interpretation which clearly states :- 1. The titles of Sections and Chapters are provided for ease of reference only for legal purposes, classification shall be determined ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surface or other working part, therefore, the item cannot fall within Chapter 82. As can be seen from the description of the goods under Chapter 82, it includes tools with hand tools and the authorities thereof; interchangeable tools, industrial knives and blades or for hand or machine saw, the blades etc., razors and razor blades, hand or pedal operated grinding wheels with frameworks etc., spoons, forks and other articles of cutlery for table or kitchen use etc., other tools and implements etc. Therefore, on a reading of the headings under Chapter 82 as well as the HSN Explanatory Notes, it is very clear that the item has assumed any of the characteristics in order to become a tool in any sense to be brought under Chapter 82. Therefore, the finding arrived at by the learned Member (J) that Chapter 82 is excluded is a correct finding which also finds support from the order of the Collectorate of Vadodara. The only reasoning given by the lower authorities is that the Rule 2(a) is required to be pressed. In the case of Aravali Forgings Ltd., Echjay Industries Ltd. and Jaypee Forges, it has been held that the burden to invoke Rule 2(a) is on the department and the department shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication subsequent to 1-3-1988 has been suggested to the appellants except in the order of the Assistant Collector. It is also seen that the Vadodara Collector has accepted the item as mere blanks and not as tools. However, it is only the sub-heading, which is disputed. 24. The learned Sr. Advocate brought to my notice the earlier judgments on this item, wherein the Tribunal categorically held that the tool bit blanks cannot be considered as tools as in the case of Collector of Central Excise v. S.S. Miranda Ltd. as reported in 1986 (30) E.L.T. 519. It has been held that the tool blanks cannot be put to actual use directly but are to be subjected to further processing in the nature of sharpening, edging etc. The blanks have not attained the shape or character of the bits and it would not be proper to infer that even before they attain the said shape and character, they would still be tool bits. This finding was again reiterated by the Tribunal in the case of Collector of Central Excise v. Indian Tools Manufacturers as reported in 1989 (43) E.L.T. 708. This judgment found favour again in the case of Proto Machine Tools Mfg. Co. v. Collector of Central Excise, as reported in 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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